Underperforming logistics business hinders Imperial’s profits

01 September 2017

South
Africa’s distribution and transport company, Imperial Holdings has reported a
10.4% drop in its net profit due to a decline in its logistics business and a
decline in its domestic vehicles sales for the South African market.

The company published its performance report,
which highlighted a drop in headline earnings per share for the full-year ended
30 June, which fell to 1 390 cents per share compared to 1 552 cents in 2016.

This, despite a 1% increase in total group
revenues that amounted to R119.5 billion, which the company attributed to the
inclusion of the Palletways acquisition and results from the Logistics South
Africa and Motor-Related Financial Services sub-divisions.

The group, which generates 57% of its
revenue, a total of R67 billion in South Africa, said, “Specific uncontrollable
factors that affected our South African business were a reduction in logistics
volumes and a 7% decline in national vehicle sales.

“The strengthening of the Rand by 11% against
the US Dollar and by 9% against the Euro with intermittent short-term
volatility created significant foreign exchange hedging losses.

“Despite deteriorating trading conditions,
currency volatility and an ambitious restructuring programme, Imperial achieved
all of the strategic, operational and financial objectives announced at the
start of the financial year,” the company added in the report.

Imperial noted approximately 43% of revenue
came from outside South Africa, as did 37% of operating profit.

Across Africa, the company explained that
falling commodity demand, together with low oil prices and the consequent
impact on currencies and private consumption continued to depress the growth
rate in sub-Saharan Africa.

For the region, Imperial recorded R11.2
billion revenue and R792 million of Group operating profit, which was generated
in the 2017 financial year.

Other transactions

The company in February bought 70% of the
Kenyan pharmaceutical company, Surgipharm, for R460 million, and later, on 15
August, announced the acquisition of Pentagone, a UK-based vehicle leasing
company.

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